A domestic tax package for digital assets drew questions from attendees at an early committee hearing. The Ways and Means Committee considered bills aimed at reducing the burden of crypto tax filing.
Democrats have raised concerns about the proposed treatment for mining, staking and small digital asset transactions.
Lawmakers Question Crypto Tax Proposals
The hearing gave attendees a first look at the proposed cryptocurrency tax changes. The bills would update tax rules for digital asset investors, users, miners, investors, brokers and businesses. Committee Chairman Jason Smith said the proposals close loopholes in the tax code. He said the package covers parity, tax clarity for digital assets and reduced paperwork.
Leading Democrat Richard Neal said they still have work to do before reaching a deal. “I’m aligned with that goal — ultimately,” Neal said during the hearing. Neal also said attendees on both sides were concerned about the package. “There is healthy skepticism on both sides,” he said. The hearing represented an opening stage before possible revisions or increases. The full House would only consider the bills after a decision by the committee.
Small Transactions and Staking Rules Get Attention
One proposal would exempt small crypto transactions with minimal gains from tax reporting. Supporters say the change could reduce accounting burdens related to routine digital asset payments. “If Americans want to pay with a stable currency instead of a credit card or cash, they should be able to do that,” Smith said. He added that users should not be faced with “a pile of tax paperwork.”
Another proposal would be mining and staking rewards. Current rules may tax rewards when users receive them and again when they sell them.
Mike Kaercher, deputy director of the Tax Law Center at NYU Law, questioned this provision. He said the bill could allow some miners and investors to defer their income until preparation. Kaercher said this approach could create a new tax subsidy. He argued that income should be taxed when taxpayers receive it.
Mining postponement fears slowing momentum
Kaercher also warned that some taxpayers might use business structures to avoid tax. He said the bill included safeguards, but abuse remained possible. His comments caught the attention of Democrats during the hearing. Several have focused on whether the mining and staking provisions could create loopholes.
The crypto industry has long called for clearer tax rules. Current rules can create complex deposit requirements for high-volume traders, miners and stakers. Lawrence Zlatkin, vice president of tax at Coinbase, said the current rules create confusion for taxpayers.
He also said they create compliance problems for businesses and burdens for the IRS. The IRS is already facing new crypto reporting requests this year. The agency also reduced its staff during President Donald Trump’s administration.
Senate path remains uncertain
Crypto tax bills face an uncertain timeline before the current Congress ends in 2026. Lawmakers are also continuing work on the Digital Asset Market Clarity Act. Kevin Wysocki, head of policy for Anchorage Digital, said tax clarity should evolve with regulatory clarity. He said clear, workable rules could support U.S. investment and jobs.
Senator Cynthia Lummis has requested similar crypto tax legislation from the Senate. However, the Senate has not proposed a major crypto tax plan. Both the House and Senate must approve any bill before it can become law. For now, the House case remains at the committee hearing stage.
